executive vice president, SunGard’s wealth management business

Data transparency – a new regulatory catch phrase, but what does it mean?

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Extensive post-mortem analysis of the 2008 financial meltdown highlighted a number of shortfalls in financial organization’s regulatory and customer reporting. Inconsistent and complicated data models, coupled with data pulled from many platforms or manually prepared, hampered regulators in fulfilling their oversight duties. Consumers contended that they lacked adequate access to the data required to understand the financial information or choices presented to them.

Post reform, there is now a host of new regulators with oversight control and authority and very different expectations of how they will request and receive information. Data interfaces require improvements for immediate access and the ability to provide a comprehensive cross-enterprise view. Under the new consumer protection reforms, financial terms and options must be presented in a clear and concise format that takes into consideration cultural variations.

Satisfying the reporting needs of executive management, internal audit and compliance and the regulators will now require intuitive reporting tools, analytics with flexible deployment methods. Firms are expected to provide richer presentations for online public consumption that match the graphical experience that people are accustomed to in online activities. Financial information needs to be not only informative but also visually appealing and easy to understand through the use of flash videos, access to live help, charting and diagrams.

Another twist on the new transparency requirements is that the Office of Financial Research created under the Dodd-Frank Act has very broad information gathering authority and is expected to have its own data center dedicated to collecting, verifying and publishing information supplied by all the financial services firms regardless of size. Requests for data are expected to be periodic, on-demand and include special data requests that must be supplied in a timely manner. Agile and flexible data reporting will be crucial in meeting these requests.

In the not so distant future regulators are expected to run their own real-time reports from the direct access they have to financial firms systems. Regulators can then compare their analysis with what the firms present to them and challenge the firm’s assumptions. This level of data access coupled with regulators ability to take action against troubled firms, has many in the industry worried that transparency may already be going too far.

What is your approach to dealing with the new data transparency requirements? Do you feel you have the internal expertise and capabilities to comply, or will you look for assistance from industry experts?

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